Renewable fuels challenge petroleum’s cost efficiency

Lower petroleum costs will not sound the death knell of bioenergy, says Max Runge, an Alabama Cooperative Extension System economist.
The bioenergy sector already is too well established to be swept away by this newfound zeal for non-renewable energy sources.

Jim Langcuster, Alabama Cooperative Extension System | Jul 16, 2012

For many farmers, all this talk of reduced fuel costs appears to present a mixed bag — on the one hand, a break from spiking operating costs, and on the other, quashed hopes that farming would soon turn the corner toward a productive future serving as the nation’s wellspring of bioenergy.

However, one economist says it’s still possible for farmers to have their cake and eat it too. Lower petroleum costs will not sound the death knell of bioenergy, says Max Runge, an Alabama Cooperative Extension System economist.

He says the bioenergy sector already is too well established to be swept away by this newfound zeal for non-renewable energy sources.

“There may be less interest, but it’s not going away,” Runge says. “We have more bioenergy infrastructure in place than ever before, especially in the Midwest, and there are still federal incentives and other provisions in place that will ensure advances in bioenergy technology and production for the foreseeable future.”

He believes this emerging energy sector is already well enough established to provide the petroleum industry with a competitive check.

“Bioenergy has become very doable in some instances, and it’s now positioned in a way that it will challenge the petroleum industry to be more cost effective,” Runge says.

Technological advances have been the biggest contributor to steep drops in oil prices in recent months.

Enhanced gasoline efficiency in cars has played a part, but so have advances in what energy specialists now describe as “tight oil,” oil produced from tight rock formations using the same technology that has led to huge advances in another emerging U.S. energy bright spot — shale gas.

These technological advances have enabled U.S. oil production to increase by 25 percent since 2008 — production levels that could increase to 600,000 barrels per day this year, according to world renowned energy consultant and author Daniel Yergin.

Shale gas

Shale gas, which accounted for only about 2 percent of U.S. oil production a decade ago, now comprises 37 percent of this total — a change that not only has set off a sharp decline in natural gas prices, but has also sparked a national debate about how much of this domestically produced gas should be exported.

Runge says these advances have detracted from what is arguably one of the most under-reported developments of the last decades: U.S. farming’s huge strides in energy efficiency.

“Technological advances have played as big a role in enhancing agricultural production as they have in other sectors of the economy,” he says.

Two farming innovations he cites as especially noteworthy are the adoption of transgenically engineering crops and precision agriculture, both of which have enabled farmers to produce more, but with less fuel, water and other inputs.

“It’s sounds simple enough — not turning over the soil but simply planting a crop into the previous season’s stubble — yet, this practice has changed the face of farming drastically by improving the fuel consumption picture,” Hall says.

While the rise of pigweed and horseweed has stymied these advances in no-till, Halls says too much is at stake for producers to turn back. Hall says producers will employ every conceivable measure to stick with no-till practices.

Hall says farmers and researchers alike are becoming increasingly aware of how a more detailed picture of all facets of farming product can shed even deeper insight into how additional advances can be made in energy efficiency.

For his part, Hall has conducted a series of studies on seeding rates to better ensure that crops achieve canopy sooner — a practice that, by crowding out weeds, reduces the need for pesticide applications, which also contributes to lower fuel costs.

“Like every other facet of the economy, farming has gotten a lot more complicated because more information is being churned out,” Hall says, “but this is a good thing because it affords all of us with more options,” Hall says.

“In that respect, we’re not different than the oil industry and everyone else.”